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The rise of the niche March 27, 2007

Posted by Steve Field in Uncategorized.
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If the 20th century was all about mass media, Chris Anderson says that it will belong to the niche.

The first part of The Long Tail (a book by Chris Anderson which stemmed from an article he authored as editor of Wired magazine, which has a blog bearing the same name) is about the economics of aggregate niche marketing. To understand the power of the collective sum of niche audiences, Anderson first looks at the economics of “hits” and “misses.”

When storage and sales space is a factor, businesses will inherently gravitate towards items that will sell in greatest volume (because they appeal to the greatest audience). This is an economy based on “hits;” only the most popular movies will be picked up for mass distribution, only the most well-backed CDs will be stocked on Wal-Mart shelves, and only the most popular DVDs will be carried at Blockbuster.

When shelf space isn’t an issue, then things change.

This is the great “why” to the question “why is digital media important for business? Because online media fundamentally shifts the way that people find, choose and purchase goods. Space isn’t an issue with digital products — the binary elements that make digital work are virtually unlimited and universally adoptable. This means that in an online marketplace, there is a nearly unlimited opportunity to distribute goods.

Anderson identifies three forces that shape online economics:

  1. Online economies democratize production. By digitizing, consumer goods become more easy to distribute, injecting more goods into the marketplace. This effectively extends the long tail
  2. Online economies democratize distribution. Online sales communities are open to anyone with an internet connection — and unlimited by geography. The availability of consumers has an upward force by creating more access to goods and flattening the tail.
  3. Online economies have the power to connect supply and demand. With “recommendation” tools, such as the ubiquitous feature on Amazon.com, online stores have the ability to direct attention to goods that are available that reflect the shopping preferences of consumers. This effectively uses “hit” preferences to make consumers aware of “niche” availabilities.

In my opinion, this last point is the most important, because it illuminates an important part of the Long Tail that Anderson has yet to address in this week’s readings (though I suspect he might in the second half of the book). In order for a Long Tail economy to work, a collection of niches is not enough — there must also be universal “hits” to link users through recommendation services to comparable niches.

Overall, it is important to note that niches, while once neglected, have become a powerful economic force in a digital economy. The sum of these small-audience product, in terms of dollars, can be just as great, if not greater, than the hits.

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Smart Mobs II March 20, 2007

Posted by Steve Field in New Media, Smart Mobs.
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Last week, I started off my post by summarizing Smart Mobs by Howard Rheingold with the term “community.” The second half of Rheingold’s book extends the community sentiment not just by discussing communities of people, but what happens when mobile technology permeates every corner of that community and weaves it together. (As a side note, the term “weave” seems especially apt in this circumstance, especially since the title of one of Rheingold’s chapters is Wireless Quilts.)

Traditionally, community has been restricted by location. Communities coalesced around the town square; they were places where people could physically unite to discuss the issue of the day, gossip about neighbors and connect with fellow citizens.

Along the same lines, information was restricted by location. To obtain money or financial information, you had to go to a bank. To get a pair of pants, you had to go to a tailor. To find out about a restaurant, you had to ask around until you found someone who had previously dined there.

But what happens when all of that information exists all around us, embedded in the social fabric? If you can point a cell phone or a mobile environment reader any given object and get reviews, recommendations, coupons, and more information about it? What if we live in a world as Weisner (p. 87) envisioned, a sore of “ubicomp?”

At that point, community isn’t just about people. It is about the people around us and the material environment that they live in.

And what if every stranger you ran into wasn’t so strange? One day, everyone might have the ability to follow any other person’s digital trail and track their personal reputation, as Rheingold suggests in chapter 5. Virtual communities like eBay operate on trust and the “shadow of the future.” In a digital world, as that shadow becomes increasingly discoverable, it also reshapes the ability of people to misrepresent themselves to the people around them.

And last, what if word of mouth isn’t restricted to the physical? If ubiquitous mobile techology makes communication easier, you are able to see events like the protests leading to the fall of Estrada in the Philippines (p. 157) or the growing protest in Seattle during the WTO Summit.

What if you can locate a stranger 3,000 miles away, learn everything about them engage them to act on behalf of a cause, or convince them to vote for a candidate, or buy a product, or share some news with a friend?

So what is the “why question” that bundles all of these questions?

Why is wireless communication technology important?

And the answer?

Because it revolutionizes what a community is and what it can do.

Cell phones and open source March 13, 2007

Posted by Steve Field in Smart Mobs, The Cathedral and the Bazaar.
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If the word that best summarizes the themes of We the Media and Naked Conversations is “conversation,” then the word that encapsulates the readings from this week is “community.” The revolution of digital media is the result of two-way communication and peer-to-peer interaction. Smart Mobs and the selected reading from The Cathedral and the Bazaar show what happens when peers of interested individuals ban together to form communities.

Smart Mobs

Smart Mobs is a play-on-words — it describes both the intelligence of small mobile devices to serve as instant, hand-held connectors (a “mobile device”), as well as the groups of networked individuals joined together by this technology (A “mob”). Although the book was written in the earlier part of the decade, his observations and the philosophy behind them ring true today.

The notion of the commons is an interesting one, and author Rheingold is right: cooperation is what makes this technology interesting.

What was most fascinating to me is thinking about what has happened even in America alone since the book was first published to impact our mobile society. First, the explosion of the BlackBerry as a communications device nearly negates an observation made by Rheingold in chapter one. While when he was writing, texting was not seen as an appropriate business activity in America while it was used in places like Japan. Today, the BlackBerry has become a status symbol among professionals who want to show that they are connected to their work, their colleagues and their clients.

The second interesting development has happened even more recently — the takeoff of Twitter. Twitter blends blogging with mobile technology, allowing users to use the Web, instant message software and their mobile devices to send short “life updates,” revealing to their friends what they are doing and thinking in real time.

Sending messages through mobile networks truly accomplishes the goal of community, connecting people to one another across untold distance virtually any time.

The Cathedral and the Bazaar

If the commons is an important concept to Rheingold, it is essential to Raymond. The Cathedral and the Bazaar is a treatise on the virtues of open-source development. Rather than locking development of new technologies behind the walls of a single company or inventor, the best work can be accomplished by cooperation among the collective. In other words, the whole is greater than the sum of the parts.

The open source model of software development allows each person willing to contribute to the whole (based on their level of interest and expertise), ultimately yielding a product that meets real users’ needs.

Perhaps the most illuminating section came when Raymond compared open source development to project management. It was especially resonant to me because the other course I am taking this semester is Digital Media Project Management. Raymond summarizes the five necessary tasks of traditional project managers as defining goals, monitoring progress, motivating staff, organizing activities and marshaling resources. Raymond says that in the context of open source, each of these needs is irrelevant. Marshaling resources is unneeded because resources are only limited by a willingness to participate. Participants don’t need to be monitored or motivated because the group is self regulating and participants self-select to participate.

The impact of search March 6, 2007

Posted by Steve Field in The Search.
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Earlier, I lamented that the first part of The Search read more as a historical primer on Google than anything else. I was disappointed that Battelle had covered much of the who, what and where, but not much of the “so what.”

After this week’s reading, I felt much more satisfied.

Chapter 7, “The Search Economy” was perhaps the most illuminating of the book. It is hard to believe that one company — a company that runs a search engine — has such an overwhelming impact on the economy. Especially for online businesses, the ability to be discovered through search can be the difference between a business’ success and failure. After reading about the case of 2bigfeet.com, it became clear that a simple tweak of a search algorithm can mean the difference in thousands of dollars in sales.

(Note: As a test, I googled 2bigfeet.com to see how they fared in search today. When looking for “big shoes,” they came up as number 4.)

Search is not just important for being discovered; in many ways, search can define who you are. For example, today, if you google “Dell,” you generally get positive results. This wasn’t always the case. Until relatively recently, if you googled “Dell,” you would get several results in the top ten about “Dell Hell.”

What is Dell Hell? The term was popularized by Jeff Jarvis of Buzz Machine in a series of rants against the company following repeated negative experiences with his Dell laptop. Because of Jarvis’ visibility and the popularity of his blog, this meme gained steam, links and traffic, and quickly started to rise in the search ranks.

Dell is a very visible company, and lots of people were searching for it online. What does it say to potential buyers who are researching Dell that when they input the name into Google, it returns a bunch of results about how poor the quality of the product is and how bad the customer service is? Essentially, it creates a blemished online picture of the company.

It appears that Dell worked around the system and used various SEO techniques to reclaim the prime online real estate when a user searches for Dell on Google. By creating a series of sites with unique domain names (domains that were indexed separately by Google’s crawlers), it was able to claim most of the top ten search results in Google.

As Battelle alluded, there are some ethical questions about the type of search engine strategy that Dell employed. Is it fair for a company to build a whole bunch of pages with separate domains to crowd out negative search results? Or is it a fair response to the disproportionate (and long-lasting) impact that blogs have on search?